Tuesday, November 16, 2010
Carmel on the Case: Zombie Debt
Financial experts are calling it "Zombie Debt" a debt that never dies. Lenders are bringing old bills many thought were history back to life and it could be very expensive if your name is on one of them. Investigative reporter Carmel Cafiero is On the Case.
WSVN -- In today's economy banks and other lenders are looking for new ways to make money. The latest trend has consumers like Tom Heinrich being blind sided by old debts.
Tom Heinrich: "It appeared to be a small claims lawsuit against me on a credit card, which hasn't existed for several years."
Heinrich was served with papers at his Pompano Beach condo saying he was was being sued for $2,499.99 by a company he says he never heard of.
Tom Heinrich: "This can't be real. This probably is just some sort of a technique that a debt collector is using to see if they can scare me into settling with them."
But it was very real the paperwork contained a copy of an old credit card bill that showed a zero balance the best Heinrich could figure is the debt goes back to when he disputed a $2,800 bill on his credit card. That money was later credited to his account. So he has no idea why it's coming up now.
But financial experts say it's becoming quite common bad debt from banks and other sources is being bundled and sold to law firms and investors who can get very aggressive about collecting.
It's largely unregulated and can be a nightmare.
Tom Heinrich: "I wanted to be heard, yeah."
Heinrich has been trying to deal with his case for more than a year. Things went from bad to worse when he was late for his hearing on the case at the plantation courthouse.
Tom Heinrich: "I had a hearing that I needed to testify in in circuit court in downtown."
Despite telling county court judge Steven shutter's office that he would be late, the judge ruled against Heinrich and gave the debt collector: $2,841.00 on the principal, which was more than the original amount asked for plus $1,384.30 in interest and another $358.00 for costs the total $4,583.30.
Tom Heinrich: "I am adamant that I don't owe a penny to anybody, let alone these people that say I owe them money, so I was very upset."
Heinrich is appealing his case and had to meet with the judge to get details about what happened that day in court.
Judge Steven Shutter: "But there' s no chance I remember. I tell you right now, I don't remember. The only reason I remember a default was entered is it says so here cause I have no independent recollection of that day."
And the judge also couldn't remember why on the same day he signed a document that listed Heinrich as the debtor on another case against someone else.
Judge Steven Shutter: "How could you have a judgment in Brian Bustamante's name against you?"
Tom Heinrich: "That's my question, you signed it and it was recorded in the county recorder's office."
Judge Shutter: "Oh, OK that's an interesting question so you can't answer that."
Judge Shutter would later say a clerk's error caused the confusion with the second judgment and he removed Heinrich's name from that case.
Carmel Cafiero: "But Heinrich is still on the hook for $4,500. All over a zombie debt he insists was dead years ago and should still be be dead today."
Heinrich is appealing and hopes to get the judgment against him thrown out. If you're being hounded for a debt you don't owe or need to know more about your rights, you can contact the Federal Trade Commission for help.
FOR MORE INFORMATION:
Debt Problems - Federal Trade Commission
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